Tax auto assessments in South Africa – everything you need to know
South Africa’s tax season starts at 20h00 on Friday (7 July).
During this tax season, the South African Revenue Service (SARS) will again use the auto-assessment process, which uses third-party data to supply taxpayers with tax returns.
Auto-assessments have rolled out since the start of the month, with many taxpayers already receiving their notices from SARS.
However, Meagan Fraser, a tax specialist at Allan Gray, says that it is still crucial that South African taxpayers understand their filing obligations to ensure compliance and avoid penalties should they not agree with the auto-assessment and need to take their tax matters further.
Prepare
Firstly, taxpayers should collect all their relevant tax certificates for the 2023 tax year before filing their returns, Fraser said.
This will include their IRP5/IT3(a) from their employers and their tax certificates from their banks, medical aid schemes, retirement annuity funds, investment managers and other relevant service providers.
Even if taxpayers are selected for SARS auto-assessment, Fraser said that it is crucial that this step is followed.
Understanding the auto-assessment process
In addition, taxpayers must know what to expect from the auto-assessment process.
From the start of July, taxpayers will receive notification via email or SMS indicating the distribution of an auto-assessment.
Taxpayers can then review the assessment on eFiling or the SARS MobiApp to ensure that the return is accurate.
New due date
Unlike the last financial year, taxpayers will now have until October 23, 2023 to review and file a return if they disagree with SARS’s auto assessment.
The new due date is when the tax-filing season normally ends, which should provide enough time for assessment review.
Fraser said that if SARS issues a return after this date, taxpayers will have 40 business days from the date of notification to file a new return.
Actions for auto-assessed taxpayers
In addition, auto-assessed taxpayers can log in to eFiling or the SARS MobiApp to check their assessments.
They will also be able to check the data used during the assessment and compare it with their tax certificates.
If the taxpayer has no qualms with their tax return, they will not need to take further action, with SARS finalising their returns once the due date is reached.
Fraser added that taxpayers need to check for any refunds or outstanding amounts, with timely payments made before the due date seen on the Notice of Assessment (ITA34) to avoid interest or penalties.
Disagreements with auto-assessment
Should a taxpayer disagree with their auto-assessment, they will have to access their return on eFiling or the SARS MobiApp to correct and submit a new return by October 23.
Although taxpayers cannot edit third-party data, they can add missing information.
If the prepopulated data is incorrect, taxpayers must contact the relevant third party to rectify the problem.
Taxpayers can then refresh their tax return and submit it after confirming the correct data submission – it may take several refreshes before it is visible.
Moreover, Fraser said it is crucial that South Africans accurately declare additional income and deductions, such as capital gains, rental income, and uncovered medical expenses, as failure to report all income may lead to SARS issuing a penalty.
“Not all South Africans are required to file a tax return. If your taxable income exceeds the tax threshold for the 2023 tax year, you need to file a return. However, exemptions exist for those who have been auto-assessed or have specific types of income,” Fraser said.
“Certain circumstances, such as conducting a business, selling assets, owning foreign currency, earning a foreign salary, or receiving a request from SARS, may also require you to file a return.”
“Non-South African tax residents generally don’t need to file unless they received South African interest or engaged in specific activities. Use the SARS website questionnaire to clarify your filing obligations.”
Read: SARS cracking down on moving money abroad – what you need to know
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